May Energy Advisor: Converting Your Vehicle to Natural Gas
Converting Your Vehicle to Natural Gas
Gas drillers in Pennsylvania will soon have to ante up impact fees based on their number of wells and the price of natural gas. The Pennsylvania Public Utility Commission will be receiving an estimated $180 million in Act 13 impact fee money by September 1. Of that money, roughly $63 million will be earmarked for statewide projects, $92 million will go to local governments and $10 million will be distributed by the Department of Environmental Protection (DEP) to encourage local governments and businesses to convert fleets of vehicles to natural gas.
With gas prices hovering around $4 per gallon, the idea of paying $2 per gallon for compressed natural gas (CNG) has become an appealing option to business owners, nonprofit groups, government agencies and individuals. Before you decide to make the leap to a CNG vehicle, there are a few things you should consider.
While the lower price per gallon and reduced emissions of CNG vehicles are attractive, be aware that the cost of a conversion can run between $7,000 and $15,000 per vehicle. This includes the retrofit system, fuel tanks, related tubing and brackets and the installation. Depending on the age and condition of your vehicle, it may make more sense to buy a new vehicle that already runs on natural gas.
Your driving habits, average mph of your vehicle and number of miles you drive each year are factors that should play into your overall cost analysis. The fewer miles you drive, the less cost-effective the conversion. Using a typical example; if gas remains at $4 a gallon and CNG is $2 a gallon, you will save roughly $2,500 a year if you drive 25,000 miles annually. In this example, depending on the cost of your conversion, it would take between 2.8 and 6 years to break even. Kulp Energy Solutions offers an online calculator for a quick estimate on your return on investment (ROI) on a CNG conversion:
Have a gas conversion specialist determine whether your car can handle the added weight of the CNG canisters. Depending on the size and number of tanks involved, the entire conversion can add another 200 to 500 pounds.
Follow all EPA standards when converting your vehicle. Be sure that your model of vehicle has been approved for conversion with a certificate of conformity.
Consider where and how you will refuel. Home refueling devices are available, but may require special permits to install. Otherwise, you will need to find a nearby station that services the general public. The number of CNG refueling stations is expected to grow over the next few years to meet consumer demand, but, currently there are only a handful of public stations in Pennsylvania. These include; Giant Eagle GetGo on Beechnut Drive in Pittsburgh, EQT on Smallman Street in the Strip District and Clean N’ Green on Rangos Lane in Washington.
For a comprehensive list of public CNG stations across the country, go to:
Are Tax Credits Available?
Currently, there are no federal tax credits for conversions of vehicles to run on natural gas. However, on November 15, 2011, The New Alternative Transportation to Give Americans Solutions Act of 2011 (the NatGas Act) was introduced to Congress. No action has been taken on this bill, but, if passed, the NatGas Act would provide incentives for the use of natural gas as a vehicle fuel; the purchase of natural gas fueled vehicles; and the installation of natural gas vehicle refueling property.
While some states offer tax credits for converting a vehicle to natural gas, Pennsylvania does not. To see what’s offered in other states go to: http://www.ngvamerica.org/incentives/stateNGV.html
Elizabeth A. Bershok
Herbein + Company, Inc.
Our next eblast of the Herbein Energy Advisor will launch mid-June. In our next edition, we’ll address the true value of your business. If your business has been growing, it may be time to find out what it’s really worth. The basics of a business valuation — coming in June. In the meantime, visit our website for up to date news and resources you can use: www.herbein.com.
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